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Todd Harrison: WhatsApp? Timing, That's WhatsApp!
The biggest Internet deal since Time Warner-AOL.
Todd Harrison    

Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

The suspense is terrible -- I hope it'll last!
-Gene Wilder as Willy Wonka in Willy Wonka & The Chocolate Factory

What do you get when you combine a manically driven multibillionaire CEO with a mobile messaging platform that has 450 million users and a growth path to (pinky to mouth) 1 billion users worldwide in the next few years?

Answer: A $19 billion acquisition -- the single biggest Internet deal since Time Warner's (NYSE:TWX) $124 billion merger with AOL (NYSE:AOL) in 2001.

But there is so much more to this story than a one-off parallel.

For starters, let's look at the numbers. WhatsApp has 55 employees, which equates to roughly $344 million per employee, and $28-$35/user, depending on the math.

In what would be the largest acquisition ever of a venture capital-backed start-up, WhatsApp is now valued higher than Southwest Airlines (NYSE:LUV), Tyson Foods (NYSE:TSN), Ross Stores (NASDAQ:ROST), Alliance Data (NYSE:ADS), Motorola Solutions (NYSE:MSI) or Starwood Hotels (NYSE:HOT) (hat tip: ZeroHedge).

Value, quite obviously, is in the eye of the beholder, and Mark Zuckerberg likes what he sees -- in fact, he likes it a lot. Benedict Evans wrote a great piece on value perception last night, one that helps illuminate some of the thought processes involved. From the buyer's perspective, the two primary takeaways are this:

1. The determination of Facebook (NASDAQ:FB) to be the "next" Facebook by acquiring disruptive technologies rather than attempting to compete with them.

2. The importance of owning the mobile social graph, which is quickly dwarfing the desktop Web.

This would help explain why Facebook paid 1% of its market value for Instagram yet close to 10% of its market value for WhatsApp. Mr. Evens also notes that at $35/usher, Facebook is paying close to what Google (NASDAQ:GOOG) paid for YouTube in 2006 on a per-user basis.

The number crunchers are everywhere, but truth be told, the success of this acquisition remains to be seen; the devil, as they say, will reside in the details of execution and monetization.

For my part, I view this mega-deal through three concurrent lenses:

The deal itself, and whether the numbers are justified; the timing of the deal, and what that means through a big-picture perspective (think Time Warner-AOL); and perhaps the most enjoyable lens of all -- the story of Brian Acton, who four years ago was unemployed and looking for a job.

Check out his Twitter posts and time stamps, courtesy of TechCrunch.







Congrats Brian; you took your shot, and now you've got 19 billion reasons to smile.

R.P.

Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
Position in FB.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Todd Harrison: WhatsApp? Timing, That's WhatsApp!
The biggest Internet deal since Time Warner-AOL.
Todd Harrison    

Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

The suspense is terrible -- I hope it'll last!
-Gene Wilder as Willy Wonka in Willy Wonka & The Chocolate Factory

What do you get when you combine a manically driven multibillionaire CEO with a mobile messaging platform that has 450 million users and a growth path to (pinky to mouth) 1 billion users worldwide in the next few years?

Answer: A $19 billion acquisition -- the single biggest Internet deal since Time Warner's (NYSE:TWX) $124 billion merger with AOL (NYSE:AOL) in 2001.

But there is so much more to this story than a one-off parallel.

For starters, let's look at the numbers. WhatsApp has 55 employees, which equates to roughly $344 million per employee, and $28-$35/user, depending on the math.

In what would be the largest acquisition ever of a venture capital-backed start-up, WhatsApp is now valued higher than Southwest Airlines (NYSE:LUV), Tyson Foods (NYSE:TSN), Ross Stores (NASDAQ:ROST), Alliance Data (NYSE:ADS), Motorola Solutions (NYSE:MSI) or Starwood Hotels (NYSE:HOT) (hat tip: ZeroHedge).

Value, quite obviously, is in the eye of the beholder, and Mark Zuckerberg likes what he sees -- in fact, he likes it a lot. Benedict Evans wrote a great piece on value perception last night, one that helps illuminate some of the thought processes involved. From the buyer's perspective, the two primary takeaways are this:

1. The determination of Facebook (NASDAQ:FB) to be the "next" Facebook by acquiring disruptive technologies rather than attempting to compete with them.

2. The importance of owning the mobile social graph, which is quickly dwarfing the desktop Web.

This would help explain why Facebook paid 1% of its market value for Instagram yet close to 10% of its market value for WhatsApp. Mr. Evens also notes that at $35/usher, Facebook is paying close to what Google (NASDAQ:GOOG) paid for YouTube in 2006 on a per-user basis.

The number crunchers are everywhere, but truth be told, the success of this acquisition remains to be seen; the devil, as they say, will reside in the details of execution and monetization.

For my part, I view this mega-deal through three concurrent lenses:

The deal itself, and whether the numbers are justified; the timing of the deal, and what that means through a big-picture perspective (think Time Warner-AOL); and perhaps the most enjoyable lens of all -- the story of Brian Acton, who four years ago was unemployed and looking for a job.

Check out his Twitter posts and time stamps, courtesy of TechCrunch.







Congrats Brian; you took your shot, and now you've got 19 billion reasons to smile.

R.P.

Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
Position in FB.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Todd Harrison: WhatsApp? Timing, That's WhatsApp!
The biggest Internet deal since Time Warner-AOL.
Todd Harrison    

Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

The suspense is terrible -- I hope it'll last!
-Gene Wilder as Willy Wonka in Willy Wonka & The Chocolate Factory

What do you get when you combine a manically driven multibillionaire CEO with a mobile messaging platform that has 450 million users and a growth path to (pinky to mouth) 1 billion users worldwide in the next few years?

Answer: A $19 billion acquisition -- the single biggest Internet deal since Time Warner's (NYSE:TWX) $124 billion merger with AOL (NYSE:AOL) in 2001.

But there is so much more to this story than a one-off parallel.

For starters, let's look at the numbers. WhatsApp has 55 employees, which equates to roughly $344 million per employee, and $28-$35/user, depending on the math.

In what would be the largest acquisition ever of a venture capital-backed start-up, WhatsApp is now valued higher than Southwest Airlines (NYSE:LUV), Tyson Foods (NYSE:TSN), Ross Stores (NASDAQ:ROST), Alliance Data (NYSE:ADS), Motorola Solutions (NYSE:MSI) or Starwood Hotels (NYSE:HOT) (hat tip: ZeroHedge).

Value, quite obviously, is in the eye of the beholder, and Mark Zuckerberg likes what he sees -- in fact, he likes it a lot. Benedict Evans wrote a great piece on value perception last night, one that helps illuminate some of the thought processes involved. From the buyer's perspective, the two primary takeaways are this:

1. The determination of Facebook (NASDAQ:FB) to be the "next" Facebook by acquiring disruptive technologies rather than attempting to compete with them.

2. The importance of owning the mobile social graph, which is quickly dwarfing the desktop Web.

This would help explain why Facebook paid 1% of its market value for Instagram yet close to 10% of its market value for WhatsApp. Mr. Evens also notes that at $35/usher, Facebook is paying close to what Google (NASDAQ:GOOG) paid for YouTube in 2006 on a per-user basis.

The number crunchers are everywhere, but truth be told, the success of this acquisition remains to be seen; the devil, as they say, will reside in the details of execution and monetization.

For my part, I view this mega-deal through three concurrent lenses:

The deal itself, and whether the numbers are justified; the timing of the deal, and what that means through a big-picture perspective (think Time Warner-AOL); and perhaps the most enjoyable lens of all -- the story of Brian Acton, who four years ago was unemployed and looking for a job.

Check out his Twitter posts and time stamps, courtesy of TechCrunch.







Congrats Brian; you took your shot, and now you've got 19 billion reasons to smile.

R.P.

Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
Position in FB.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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